Wealth Check: 'Is a new career in music financially sound?'

Vicky Tilson has swapped her comfortable life working in the civil service to become a musician. She left behind a generous pension and a higher than average salary, and plans to top up her £20,000 income with performances and teaching.

The 33-year-old is now keen to get on the housing ladder with the help of her parents and wants to get her pension back on track. But she's also realistic. "The key thing for me is to maintain a comfortable standard of living in my own home, with a car and the odd holiday," she says. "I'm prepared to save what I will need for retirement, and I'm happy to work until I'm 70."

Three financial advisers help Vicky this week, Alex Pegley of Calculis, Kevin Anderson of Budge and Co., and Danny Cox of Hargreaves Lansdown.

CASE NOTES: Vicky Tilson, 33, musician
Income: £20,000 salary with up to £4,000 top up
Monthly outgoings: £685 – includes £570 for
Pension: Around £1,495 a year, plus a lump sum of £2,788, based on current pension contributions
Savings: Abbey cash ISA worth £16,500, Norwich Union ISA worth £1,400 and a Norwich Union Investment ISA worth £892. ING Direct savings account has £5,500.
Mortgage: £0
Debts: £5,000 student loan

Pension

All three advisers warn Vicky that by resigning from the civil service, she has left behind one of the best pension plans available. "But she has done the correct thing by leaving these benefits as a deferred pension, not frozen, as many people think," says Kevin Anderson. "These deferred benefits will increase by inflation between the date she left and her retirement."

But Danny Cox says that the greatest gain from final salary pension schemes and the state pension could be by taking them as soon as she reaches the right age.

Until then, he adds: "A £100 per month contribution will cost just £80 because of the tax relief. This could provide her with a fund of £185,000, which would provide a pension in today's terms of around £3,700. This assumes a 6 per cent investment return after charges."

Vicky would like to retire on around £25,000 a year, but Cox warns that this contribution is unlikely to be sufficient to meet her income needs, even when added to her other pensions. "Vicky should save as much as she can as early as possible and build upon that over the years," he suggests.

Mortgage

Vicky wants to buy a house within a year, but the advisers believe this may not be the right time to buy. Alex Pegley warns that most of the downward pressure on property prices is decreasing the amount that is available from mortgage lenders. "As a non-property owner, Vicky may find it more difficult than existing homeowners to secure a mortgage," he says. "The key for Vicky will be the size of the deposit she can get. There are still some 90 and 85 per cent mortgages available, but they are getting fewer and the terms are deteriorating."

And Anderson warns that Vicky's varying employment status will present challenges for lenders. He says that she has made an admirable decision to pursue her love of music "but should try to save as much money as possible and reassess her circumstances in one year's time".

Savings and Investments

Vicky should think about transferring her money from her ING account into an ISA, suggests Anderson. "Many people are unaware that they can transfer between cash ISA providers in order to maximise returns," he adds. Pegley agrees that Vicky should review where her savings are held. "Alliance & Leicester's eSaver, for example, is currently paying 6.5 per cent, and her ISA may also benefit from being moved to Scarborough Building Society at 6.5 per cent," he says.

To find an independent financial adviser in your area, visit www.unbiased.co.uk

For a free financial check-up, write to Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Sport
football This was Kane’s night, even if he played just a small part of it
Travel
travel Dreamland Margate, Britain’s oldest amusement park, is set to reopen
News
news
News
Founders James Brown and Tim Southwell with a mock-up of the first ever ‘Loaded’ magazine in 1994
media
News
Threlfall says: 'I am a guardian of the reality keys. I think I drive directors nuts'
people
Voices
voices The group has just unveiled a billion dollar plan to help nurse the British countryside back to health
News
The Westgate, a gay pub in the centre of Gloucester which played host to drag queens, has closed
news
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

    The saffron censorship that governs India

    Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
    Prince Charles' 'black spider' letters to be published 'within weeks'

    Prince Charles' 'black spider' letters to be published 'within weeks'

    Supreme Court rules Dominic Grieve's ministerial veto was invalid
    Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

    How did fandom get so dark?

    Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
    The galaxy collisions that shed light on unseen parallel Universe

    The cosmic collisions that have shed light on unseen parallel Universe

    Dark matter study gives scientists insight into mystery of space
    The Swedes are adding a gender-neutral pronoun to their dictionary

    Swedes introduce gender-neutral pronoun

    Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
    Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

    Disney's mega money-making formula

    'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
    Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

    Lobster has gone mainstream

    Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
    Easter 2015: 14 best decorations

    14 best Easter decorations

    Get into the Easter spirit with our pick of accessories, ornaments and tableware
    Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

    Paul Scholes column

    Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
    Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

    The future of GM

    The greenhouses where Monsanto 'plays God' with the future of the planet
    Britain's mild winters could be numbered: why global warming is leaving UK chillier

    Britain's mild winters could be numbered

    Gulf Stream is slowing down faster than ever, scientists say
    Government gives £250,000 to Independent appeal

    Government gives £250,000 to Independent appeal

    Donation brings total raised by Homeless Veterans campaign to at least £1.25m
    Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

    The most borrowed book at Bank of England library? Oh dear

    The book's fifth edition is used for Edexcel exams
    Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

    Cowslips vs honeysuckle

    It's the hunt for UK’s favourite wildflower
    Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

    Did a botched blackmail attempt help Cyril Smith escape justice?

    A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss